As small business owners, we are always looking for ways to minimize stress and maximize our efficiency. This isn’t difficult, but like any good plan, it takes focus and structure. Here are Maestro Associates’ four favorite tactics to keep things moving in the right direction.
1. Understand cash flow
Cash flow is the lifeblood of your business. And when it slows down or comes to a halt, it’s natural to feel apprehensive about the future of your business. Cash flow is a measurement of the amount of cash that both enters and exits your business over a period of time. Different from revenue, which just measures the money coming into your business, cash flow shows the financial health of a business by showing how much actual cash the business has on hand. Think of it like this, the balance in your bank account is the truest measurement of cash flow — if your profits are $20k a month, but you’re paying out $25k a month in salaries, overhead, and insurance, your cash flow is negative. Knowing your sales cycles, accounts payables, and having a well-rounded marketing strategy can all help keep your business cash flow positive.
So many business owners are solely focused on how much is coming into their business monthly, which can be a misguiding metric for business health.
2. Be honest about challenges
So, you’ve set unrealistic deadlines, had a change in your strategy or tactics, or ran a program and didn’t see the results you were hoping for. Be honest. In today’s environment of hyper-transparency, being upfront about challenges that you’re facing will likely be lauded by your clients and team members. Not only will transparency help build stronger relationships, but it can also set future projects up for greater success. Once you’ve figured out a path forward, keep everyone in the loop — employees and clients are invested in your success. And, moving forward, use your learnings to take the extra effort to deliver excellent results, making your clients and team members proud and satisfied.
3. Surround yourself with people you trust (team and advisors)
Very few small business owners would say “I did this all on my own.” Once business ideas start turning into reality, most people quickly realize they need help. You’re starting a business because you're an expert in something, not an expert in everything. Sure, small business owners and employees often wear multiple hats, become utility players, and generally have a thirst for knowledge that makes them perfect for the entrepreneurial lifestyle. But at a certain point, to keep your focus on running and growing, or maintaining, your business you’ll have to hire out payroll, or marketing, or sales. Success doesn’t occur in a vacuum, and who you surround yourself with can impact the way you think, act and feel on a day-to-day basis. Find people who push you to be better, not the ones who distract from your potential.
4. Always build a rainy-day fund
Surely you’ve heard financial planners talking about building a rainy day fund for individuals and families. Well, the same principle applies to small businesses. Not only will keeping a rainy day fund reduce the need to take out high-interest loans, such as credit cards, to cover unexpected expenses, but knowing it’s there if you need it can help reduce overall anxiety as a business owner in these unprecedented times. Having enough cash to cover 6 months of expenses will help keep you covered in the event of a short-term emergency, employee turnover, a lawsuit, or a slow quarter. It’s necessary to have cash tucked away to make sure you can keep the doors open for a few months while you make the changes needed to increase cash flow.